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Presentations : Northern Caucasus Resorts (NCR)

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EXPANDING THE BOUNDARIES OF TOURISM

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MAIN RUSSIAN EVENTS WORLD TOURISM INDUSTRY DATA2014 WINTER OLYMPICS THE 2018 FIFA WORLD CUPIN SOCHI WHY CAUCASUS? EXCEPTIONAL NATURAL ENVIRONMENT — Russia is expected to become one of the top ten destinations in the world by 2020 with 40 million visitors — International tourist traffic to Caucasus resorts increasing by 10% annually — Rising demand for vacation from Russian visitors due to progression of middle-class up to 20% annually — Resorts ideally positioned to draw Russian and European visitors and benefit from increasing demand for ski leisure in Asia and the Gulf

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INTRODUCTION— With the upcoming 2014 Olympic Winter Games in Sochi and 2018 FIFA World Cup also in Russia, the great potential of the North Caucasus is about to be revealed— Russian Government has established a dedicated development company, Northern Caucasus Resorts (NCR), to carry out the largest mountain tourism project in the world— Sberbank and Vnesheconombank, the largest banks in Russia, are partners in the Project— Requiring up to $30 billion ininvestments, the Project involves the creation of five world- class ski resorts, 120 km of beach recreation and health & wellness resorts offering a large variety services— Scheduled to open progressively, the first stage of the resorts will be between January 2013 and December 2015— To capitalize on international know-how in the mountain tourism sector, NCR has set up a partnership with the Caisse des Depots et Consignations (CDC), France, and Korean Western Power, Korea

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KEY INVESTMENT CONSIDERATIONSSTRONG OFFICIAL SUPPORT— Russian Government to develop the region and improve the overall environment through a $100bn economic and social renewal strategy— Establishment of Special Economic Zones administered by NCR as single point of contact for investors— $2bn of investments from the Russian Government through NCR in the Project infrastructure— Simplified approvals and highly favorable land, corporate and VAT tax regime— State guarantees for up to 70% of investments for non-commercial risks— Consistent official responsiveness for adjusting legislative and regulatory base to keep pace with development project’s needs

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INSTITUTIONAL SUPPORTFAVORABLE TAX REGIME— Creation of a special economic zone around the resorts with favorable tax regime — Corporate tax: from 0% to 13.5% till 2023 (instead of 20%) — Land tax: 0% for 5 years — Property tax: 0% for 10 years — Accelerated regime for depreciation — Social taxes for resident entities reduced to 14% till 2017 (instead of 34%)

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KEY INVESTMENT CONSIDERATIONSEXCEPTIONAL NATURAL ENVIRONMENT— Chain of most unspoilt European mountains stretching 1,200km from the Black Sea to the Caspian - breathtaking contrast between warm seashores and permanent glacial snows— Mt. Elbrus, the tallest peak in Europe, stands at 5,642m — Caucasus State Natural Biosphere Reserve included in the UNESCO World Heritage List — Long ski season spanning October to June— Numerous mineral springs create thermal and spa facilities for summer- winter health and wellness tourism

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PRIME LOCATION TO BENEFIT FROM GROWINGDEMAND FOR SKI LEISURE IN RUSSIA, ASIA AND THE GULF2 hours’ of flight from the Gulf3 hours’ of flight from Central Europe